XAUUSD Technical Analysis

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If you look at the XAUUSD chart in the H4 time frame, it is clear at first glance that the downward pressure has increased in the last month. Looking at longer periods of time, such as daily or weekly, we will find that this negative pressure is a fairly normal reaction to the yellow metal’s strong gains in late May. As with many other currencies such as the British pound and the New Zealand dollar, economic news prevailed last summer.

Lower support is somewhat evident here near the 1458 level, which is the area where losses stopped in early October. It seems that the very sharp angle for the upward response suggests that this is a strong area that could withstand further retesting. It also appears that the higher resistance is at the high gold hit against the US dollar last September at 1534. It makes sense for traders to watch this psychological area at 1500 over the next few weeks. While this level was not a major drag on gold last month, the frequent retesting in October created significant momentum in this area.

Technical indicators for gold versus the US dollar XAUUSD in the H4 timeframe

Periods 20, 50, 100 and 200 SMAs generally give a strong sell signal. The price has moved below all of those moving averages from two weeks ago. We can point out that the 200 SMA is a potential resistance level now as the price has not broken it so far this month.

The Bollinger Bands indicator with its settings (20, 0, 2) has been contracting on the chart since late September and early October. This means that the main downward pressure may be limited for now, unless fundamental events result in a major gold sell-off. The presence of the upper divergence of the indicator very close to the 50 and 100 SMAs could indicate the importance of this area as resistance for the time being.

The slow stochastics (15, 5, 5) don’t seem to be giving a clear signal. Even the large bearish candle that appeared yesterday did not result in the index reaching the oversold level. The MACD indicator with its settings (12, 30, 9) is currently not emitting a signal.

Price and Fibonacci Behavior

The price behavior of gold is currently showing a certain volatility, which suggests that buying interest has diminished somewhat. The Japanese candlestick patterns that appeared last night and up until this morning tend to have small bodies and support this impression. Confirmation of the sale of gold through price action can be the closing price below 1472. If this does not happen, however, there will be no clear signals from Japanese candlesticks, nor from technical patterns that have formed on the chart.

The Fibonacci retracement here is based on the huge downward move that happened in the last 10 days of September. This is on top of the upward reaction in early October. The 61.8% Fibonacci level is the most important current Fibonacci range. Falling below this level can cause the bulls to lose control of the gold price and therefore the yellow metal will only fall temporarily. The 50% Fibonacci retracement is also important because it overlaps the slow moving average levels of 50 and 100 as well as the upper deviation of the bands. Additionally, the 61.8% Fibonacci retracement level near the 200 SMA could also be important.

Key data:

US retail sales for the month of September are an important part of the regular and influential data for the gold symbol XAUUSD. The US Retail Sales Index result is due this afternoon at 12:30 PM GMT.

Although there are no exact dates, Brexit developments this month were very important for gold against most currencies. An unexpected sudden outbreak in the ongoing UK-EU negotiations will be a major negative indicator of the gold price. Likewise, a breakdown in talks (which is perhaps a little more likely) could propel gold to new heights and a major rally.

Summary of the XAUUSD technical analysis:

The technical picture for gold versus the US dollar in general suggests that this symbol could take further losses over the next few days. News of the Brexit talks could change this outlook significantly, so traders should be careful to avoid any unpleasant surprises.

Fundamental analysis: further losses for the EUR after weak economic data

The EUR has risen this week amid the weak fundamentals of the Eurozone has to accept some losses against many currency symbols. Most notable was yesterday’s production data. The disappointing results seem to bolster the prevailing impression in equity markets that trade wars are still having a major impact on the future of the economies of the European Union.

After a slight correction yesterday, the euro continued to decline against the US dollar to hit $ 1.092. The European single currency also recorded continuous losses against the Japanese yen, with the euro exchange rate against the yen reaching its lowest level in a month at 117.58 at the time of writing. On the other hand, the euro gained against the British pound and the Australian dollar, reaching 0.89 piastres and 1.63 Australian dollars.

Negative production and trade data for the eurozone

The Sino-US trade war is likely to be one of the biggest factors that have resulted in the euro falling steadily and markedly against the US dollar in recent months. Tariffs and a lack of risk taking in financial markets created some obvious negativity. But spill-over effects on the manufacturing industry outside the world’s two largest economies are also key factors.

Yesterday, the Eurozone manufacturing PMI showed the sharpest decline in production since October 2012. All new purchases and orders, as well as production, fell dramatically. On top of that sharp decline, the index hit 45.7, the lowest reading for the manufacturing PMI over the past seven years.

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